Certain S&P/ASX 200 Index (ASX: XJO) shares have an excellent growth outlook, in my view. Businesses that are looking to expand significantly have a lot of potential to compound their earnings.
It's not guaranteed that businesses with impressive plans will be fully successful. But if they have been successful up until now, then I think they have great potential by continuing their expansion in existing and new markets.
I'll talk about two ASX 200 shares that are expanding internationally, which I think will be much larger businesses in three, five, and ten years.
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Premier Investments Ltd (ASX: PMV)
The business currently owns the retail brands Peter Alexander and Smiggle and a 25% stake in the electrical consumer products business Breville Group Ltd (ASX: BRG).
Peter Alexander is a pyjama business with more than 130 stores across Australia and New Zealand.
Smiggle is a children's stationery and school accessories business. Its products are available in more than 20 countries, with over 300 standalone stores in Australia, New Zealand, Singapore, Malaysia, the UK, and the Republic of Ireland.
While I'm optimistic about Breville's future, I'm particularly excited by what Peter Alexander could achieve.
Three months ago, the ASX 200 share announced its FY25 half-year result, which included an update about Peter Alexander's progress. It achieved sales of $297.7 million, up 6.6% year over year. Four new Australian stores were opened, and it relocated its Chadstone flagship store, expanding the footprint by more than 50%.
The Chadstone store is the first with Peter Alexander's new store concept design, which is planned for rollout in future store investments.
It also launched its UK expansion in November 2024, which included a website and three stores in prime London shopping centres.
The company has identified opportunities for up to 10 new stores as part of the initial launch plans over the next few years. The UK is a much larger market than Australia and New Zealand, which bodes well for future growth for the ASX 200 share.
Guzman Y Gomez Ltd (ASX: GYG)
This is a Mexican food business with a large network of restaurants in Australia and a small presence in Singapore, Japan, and the US.
For me, there are three tailwinds that can help drive this business higher in the coming years.
Firstly, the strong performance of its existing store network. In the FY25 third quarter, the Australian, Singaporean, and Japanese combined comparable sales growth was 11.1% year over year.
Second, the business is expecting its restaurants to deliver compelling economics in time, with a target return on investment (ROI) of around 50% for corporate stores and around 30% for franchise restaurants (including royalties). GYG is also expecting its restaurant profitability margins to increase too – they have already increased from 18.6% in FY20 to 21.8% in HY25.
Third, it's planning to expand its store network significantly. It's expecting to open 31 locations in FY25 and at least 40 per year in the longer term.
The combination of each restaurant achieving more sales and growing margins, and the ASX 200 share growing its network size, could lead to very pleasing results.
